The evolution of corporate governance in Brazil

Bernard Black; Antonio Gledson de Carvalho; Joelson Oliveira Sampaio

doi:10.1016/j.ememar.2014.04.004

The evolution of corporate governance in Brazil

Bernard Black^*, Antonio Gledson de Carvalho, Joelson Oliveira Sampaio

^*Corresponding author for this work

Pritzker School of Law

Research output: Contribution to journal › Article › peer-review

49 Scopus citations

Abstract

We use extensive hand collected surveys reporting governance practices of Brazilian firms in 2004, 2006, and 2009 to build a broad corporate governance index and analyze the evolution of corporate governance in Brazil and the association between governance and firm value. We find that corporate governance practices improved significantly over this period. This evolution is due to two main factors: 1) growth in Novo Mercado and Level II (NM&L2) listings, mainly through IPOs by new firms, and 2) improved practices at non-NM&L2 firms, principally through adopting governance elements required for NM&L2 listing. Governance practices for firms already listed on NM&L2 were stable. Adoption of the elements of our governance index that are required for NM&L2 listing predicts higher firm value. In contrast, adoption of the remaining elements of our index does not predict firm value. Thus, governance changes appear to respond to investor preferences.

Original language	English (US)
Pages (from-to)	176-195
Number of pages	20
Journal	Emerging Markets Review
Volume	20
DOIs	https://doi.org/10.1016/j.ememar.2014.04.004
State	Published - Sep 1 2014

Funding

The authors thank Humberto Gallucci Netto and Pedro Luiz Aprigio for their excellent research assistance. We are grateful for valuable comments from an anonymous referee. We acknowledge the support of BMF&Bovespa , the Brazilian Institute for Corporate Governance , and the Global Corporate Governance Forum .

Keywords

Boards of directors
Brazil
Corporate governance
Minority shareholders

ASJC Scopus subject areas

Business and International Management
Economics and Econometrics

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1016/j.ememar.2014.04.004

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title = "The evolution of corporate governance in Brazil",

abstract = "We use extensive hand collected surveys reporting governance practices of Brazilian firms in 2004, 2006, and 2009 to build a broad corporate governance index and analyze the evolution of corporate governance in Brazil and the association between governance and firm value. We find that corporate governance practices improved significantly over this period. This evolution is due to two main factors: 1) growth in Novo Mercado and Level II (NM&L2) listings, mainly through IPOs by new firms, and 2) improved practices at non-NM&L2 firms, principally through adopting governance elements required for NM&L2 listing. Governance practices for firms already listed on NM&L2 were stable. Adoption of the elements of our governance index that are required for NM&L2 listing predicts higher firm value. In contrast, adoption of the remaining elements of our index does not predict firm value. Thus, governance changes appear to respond to investor preferences.",

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author = "Bernard Black and {de Carvalho}, {Antonio Gledson} and Sampaio, {Joelson Oliveira}",

note = "Funding Information: The authors thank Humberto Gallucci Netto and Pedro Luiz Aprigio for their excellent research assistance. We are grateful for valuable comments from an anonymous referee. We acknowledge the support of BMF&Bovespa , the Brazilian Institute for Corporate Governance , and the Global Corporate Governance Forum . Publisher Copyright: {\textcopyright} 2014 Elsevier B.V. Copyright: Copyright 2017 Elsevier B.V., All rights reserved.",

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doi = "10.1016/j.ememar.2014.04.004",

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N1 - Funding Information: The authors thank Humberto Gallucci Netto and Pedro Luiz Aprigio for their excellent research assistance. We are grateful for valuable comments from an anonymous referee. We acknowledge the support of BMF&Bovespa , the Brazilian Institute for Corporate Governance , and the Global Corporate Governance Forum . Publisher Copyright: © 2014 Elsevier B.V. Copyright: Copyright 2017 Elsevier B.V., All rights reserved.

PY - 2014/9/1

Y1 - 2014/9/1

N2 - We use extensive hand collected surveys reporting governance practices of Brazilian firms in 2004, 2006, and 2009 to build a broad corporate governance index and analyze the evolution of corporate governance in Brazil and the association between governance and firm value. We find that corporate governance practices improved significantly over this period. This evolution is due to two main factors: 1) growth in Novo Mercado and Level II (NM&L2) listings, mainly through IPOs by new firms, and 2) improved practices at non-NM&L2 firms, principally through adopting governance elements required for NM&L2 listing. Governance practices for firms already listed on NM&L2 were stable. Adoption of the elements of our governance index that are required for NM&L2 listing predicts higher firm value. In contrast, adoption of the remaining elements of our index does not predict firm value. Thus, governance changes appear to respond to investor preferences.

AB - We use extensive hand collected surveys reporting governance practices of Brazilian firms in 2004, 2006, and 2009 to build a broad corporate governance index and analyze the evolution of corporate governance in Brazil and the association between governance and firm value. We find that corporate governance practices improved significantly over this period. This evolution is due to two main factors: 1) growth in Novo Mercado and Level II (NM&L2) listings, mainly through IPOs by new firms, and 2) improved practices at non-NM&L2 firms, principally through adopting governance elements required for NM&L2 listing. Governance practices for firms already listed on NM&L2 were stable. Adoption of the elements of our governance index that are required for NM&L2 listing predicts higher firm value. In contrast, adoption of the remaining elements of our index does not predict firm value. Thus, governance changes appear to respond to investor preferences.

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The evolution of corporate governance in Brazil

Abstract

Funding

Keywords

ASJC Scopus subject areas

UN SDGs

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